The $800 Million ebook

Jun 19, 2014 No Comments by

For some time TF has felt like Winnie the Pooh; bear of little brain.  We just can’t get our head around what Apple has done that’s so heinous in relation to supposedly ‘fixing’ the price of ebooks.  In the US, Apple was being sued for more than $800 million by ‘several states and consumers’.  It was a class action suit, which TF takes to mean one where a group of people with an axe to grind gets together, hires lawyers and tries to get compensation out of a big company for some alleged and significant wrong-doing.  Examples would be consumers suing the tobacco industry for deliberately withholding information relating to the dangers of smoking or a crusader such as Erin Brokovich going after a chemical company that poisoned the water and those who drank it.  Or something.  Anyway, class action is about life and death.  Or so we thought.

As far as we understand it, when the first iPad was launched, Steve Jobs tried to tie in all major book publishers to a deal that gave Apple a big fat slice of ebook profits and excluded its main rival, Amazon, whose first Kindle ebook reader had appeared in 2007.  Take up of such new technology was necessarily slow because publishers hadn’t got their collective acts together the way they have today.  When Apple’s iPad arrived in 2010 it made all other hand-held tablet devices look pretty shit.  It would appear that Saint Steve wanted to corner the ebook market and thought he had the whip hand because his iPad was so lush.  At the time there were other e-readers aside from the Kindle but none could hold a candle to the iPad in terms of being a satisfying user experience. And four of the five publishing houses obviously agreed because they signed up to what wasn’t a very good deal for them but, so the reasoning seemed to go, was better than no deal at all. Why they didn’t all get together and tell Apple to take a hike might be down to the lack of clarity in their crystal balls, but whatever, they caved, partly, we suspect, because Apple wanted to price ebooks significantly higher than Amazon and Apple had the stardust cachet and the humungous profits to woo the publishers.  Everyone was being greedy.

And not only was Apple then sued, the publishing houses were as well.  They have already coughed up $166 million to settle ‘anti-trust’ claims.  Apple has now agreed to settle out of court.  We don’t know what it’s going to cost them but enough for several ebook downloads, we suspect.

And this is where TF starts to get brain ache.  Who are the injured parties here and what form has their suffering taken?  Has someone died from ebook withdrawal?  Why are the settlement amounts so huge?  How are the amounts arrived at and by whom? In The Times on June 18th it was reported: “More than 30 US states and territories separately sued Apple on behalf of their consumers, while individual consumers in other states and territories filed a class action lawsuit. They claim that the technology company had overcharged buyers of ebooks by $280 million.”

Huh? No one forces anyone to buy a book, whether it’s digitally rendered or paper and print.  If Apple had set their prices too high, a lack of sales would have suggested their error.  And there are always alternatives for the consumer such as libraries and those dusty repositories known as ‘book shops’.  TF would have thought too-expensive ebooks would have had book shops rejoicing provided their products were cheaper.  Amazon might have some sort of legitimate grievance but they don’t seem to feature in the list of class action plaintiffs.  The only people we can see getting rich from all these millions of compensatory dollars are the lawyers.

It’s the idea that Apple and the publishers ‘colluded’ and that their having done so is not only a huge deal but also a crime that we don’t get.  Who decided that a music track download on iTunes would cost 99 cents?  Did Apple and the record labels ‘collude’ to reach this benchmark?  Do all major supermarkets ‘collude’ with diary farmers to set the price of a pint of milk?  Why is anything the price it is?  Why isn’t there a class action suit against gas suppliers in the UK who haven’t reduced their prices to consumers even though the wholesale price of gas has come down?  Same with petrol.  Who decides what a litre of car juice costs?  TF thinks it’s being overcharged for doggy snacks.  Maybe we should sue the local pet shop.  I wonder how we’ll get on.